Dana Holding Corporation Reports Second-Quarter 2009 Results
-- Achieved break-even net income in the second quarter of 2009 -- Reported quarterly EBITDA of $94 million despite a 49-percent decrease in sales from the same period last year -- Achieved second-quarter financial covenants -- Generated positive free cash flow of $73 million -- Reduced debt by 10 percent, primarily through market purchases at attractive prices
TOLEDO, Ohio, Aug. 6 -- Dana Holding Corporation today announced that it achieved break-even net income in the second quarter of 2009, compared to a loss of $122 million during the same period last year.
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Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) was $94 million, compared with $164 million in 2008. Second-quarter sales were $1,190 million, a 49-percent decrease compared with sales of $2,333 million during the same period last year. The decrease was driven by lower vehicle production across all market segments, most notably within the off-highway sector.
At June 30, 2009, cash balances remained solid at $553 million, with total available liquidity of $664 million. Net debt was $546 million.
Cost Savings, Operational Improvements Continue Amid Difficult Markets
"Our second-quarter revenues reflected the continued weak demand in all three of our market segments," said Dana Executive Chairman John Devine. "Despite this difficult environment, our aggressive efforts to resize our organization, implement permanent structural improvements, and address pricing continued to take hold. These actions resulted in substantial profit and cash flow improvements compared to the prior quarter, despite slightly lower sales."
During the quarter, Dana reduced its global workforce by approximately 1,400 employees, bringing its total year-to-date reduction to approximately 6,200. The workforce reductions include both actions to align the organization to reduced volume levels, as well as permanent, structural reductions to improve productivity and profitability.
The company achieved a first-half pricing improvement of $131 million, which includes the recovery of material cost increases. Other actions - primarily cost reductions - improved first-half EBITDA by $113 million.
Cash Generation Enables Debt Reduction
Dana generated positive free cash flow of $73 million for the second quarter, which was impacted considerably by improvements in working capital totaling $91 million. The majority of the cash generated was utilized to reduce debt levels. During the quarter, the company reduced debt by $129 million, or 10 percent. The debt reduction was achieved primarily through market purchases made at a discount to par.
"The positive cash flow generated in the second quarter enabled us to reduce debt levels and interest expense at an attractive price, and strengthened our debt position moving forward," said Chief Financial Officer Jim Yost. "Even without the benefit of the debt repurchase, we would have achieved our debt covenants."
Six-Month Results
Sales for the six months ended June 30, 2009, were $2,406 million, which compares with $4,645 million for the same period in 2008. For the first half of 2009, the company reported a net loss of $157 million compared with income of $537 million for the same period in 2008. The six-month 2008 results include a net gain of $754 million recognized in connection with the company's emergence from bankruptcy and application of fresh start accounting. EBITDA for the first six months of 2009 was $110 million, compared with EBITDA of $298 million during the same period in 2008.
James E. Sweetnam Named President & CEO
On May 27, Dana announced the appointment of James E. Sweetnam, former president of Eaton Corporation's global Truck Group, as President and Chief Executive Officer. Sweetnam was appointed to Dana's Board of Directors on July 1.
"We've been delighted to welcome Jim to the Dana team," Devine said. "Adding a leader of Jim's caliber bolsters an already solid team of managers and employees across our global organization who are making meaningful strides, even in the face of today's industry headwinds," he added. "Collectively, we're reshaping Dana into a company that will be well-positioned to succeed as our markets recover."
Dana to Host Second-Quarter Conference Call at 10:30 a.m. Today
Dana will discuss its second-quarter results in a conference call at 10:30 a.m. EDT today. Participants may listen to the audio portion of the conference call either through audio streaming online or by telephone. Slide viewing is only available online via a link provided on the Dana Investor Web site. To dial into the conference call, domestic locations should call 1-888-311-4590 (Conference I.D. # 19149740). International locations should call 1-706-758-0054 (Conference I.D. # 19149740). Please ask for the Dana Holding Corporation Financial Webcast and Conference Call. Phone registration will be available beginning at 10 a.m. EDT. An audio recording of the call will be available after 5 p.m. To access this recording, please dial 1-800-642-1687 (U.S. or Canada) or 1-706-645-9291 (international) and enter the conference I.D. number 19149740. A webcast replay will also be available after 5 p.m. today, and may be accessed via the Dana Investor Web site.
Non-GAAP Measures
In connection with Dana's emergence from bankruptcy on January 31, 2008, and the application of fresh start accounting in accordance with the provisions of the American Institute of Certified Public Accountants' Statement of Position 90-7, the post-emergence results of the successor company for the five months ended June 30, 2008 and the pre-emergence results of the predecessor company for the one month ended January 31, 2008 are presented separately as successor and predecessor results in the financial statements presented in accordance with generally accepted accounting principles (GAAP). This presentation is required by GAAP as the successor company is considered to be a new entity and the results of the new entity reflect the application of fresh start accounting. For the readers' convenience and interest in this earnings release, we have combined the separate successor and predecessor periods to derive combined results for the six months ended June 30, 2008. The financial information accompanying this release provides the separate successor and predecessor GAAP results for the applicable periods, along with the combined results described above for the two periods of 2008.
This release refers to EBITDA, which we've defined to be earnings before interest, taxes, depreciation, amortization and restructuring. EBITDA is a non-GAAP financial measure, and the measure currently being used by Dana as the primary measure of its reportable operating segment performance. EBITDA was selected as the primary measure for operating segment performance as well as a relevant measure of Dana's overall performance given the enhanced comparability and usefulness after application of fresh start accounting. The most significant impact to Dana's ongoing results of operations as a result of applying fresh start accounting is higher depreciation and amortization.
By using EBITDA, which is a performance measure that excludes depreciation and amortization, the comparability of results is enhanced. Management also believes that EBITDA is an important measure since the financial covenants of our primary debt agreements are EBITDA-based, and our management incentive performance programs are based, in part, on EBITDA. Because it is a non-GAAP measure, EBITDA should not be considered a substitute for net income or other reported results prepared in accordance with GAAP. The financial information accompanying this release provides a reconciliation of EBITDA for the periods presented to the reported income (loss) from continuing operations before income taxes, which is a GAAP measure.
Forward-Looking Statements
Certain statements and projections contained in this news release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
Dana's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this news release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
About Dana Holding Corporation
Dana is a world leader in the supply of axles; driveshafts; and structural, sealing, and thermal-management products; as well as genuine service parts. The company's customer base includes virtually every major vehicle manufacturer in the global automotive, commercial vehicle, and off-highway markets. Based in Toledo, Ohio, the company employs approximately 22,500 people in 26 countries and reported 2008 sales of $8.1 billion. For more information, please visit: www.dana.com.
DANA HOLDING CORPORATION
Consolidated Statement of Operations (Unaudited)
For the Three Months Ended June 30, 2009 and 2008
Three Months Ended
(In millions, except per share amounts) June 30, June 30,
2009 2008
Net sales $1,190 $2,333
Costs and expenses
Cost of sales 1,128 2,188
Selling, general and administrative
expenses 59 84
Amortization of intangibles 18 19
Realignment charges, net 29 40
Impairment of goodwill 75
Impairment of intangible assets 6 7
Other income, net 61 20
Income (loss) from continuing operations
before interest, reorganization items and
income taxes 11 (60)
Interest expense 37 35
Reorganization items (3) 12
Loss from continuing operations before income
taxes (23) (107)
Income tax benefit (expense) 21 (12)
Equity in earnings of affiliates (1) 2
Loss from continuing operations (3) (117)
Loss from discontinued operations (2)
Net loss (3) (119)
Less: Net income (loss) attributable
to noncontrolling interests (3) 3
Net income (loss) attributable to the
parent company - (122)
Preferred stock dividend requirements 8 8
Net loss available to common stockholders $(8) $(130)
Loss per share from continuing operations
attributable to parent company stockholders:
Basic $(0.08) $(1.27)
Diluted $(0.08) $(1.27)
Loss per share from discontinued operations
attributable to parent company stockholders:
Basic $- $(0.01)
Diluted $- $(0.01)
Net loss per share attributable to parent
company stockholders:
Basic $(0.08) $(1.28)
Diluted $(0.08) $(1.28)
Average common shares outstanding
Basic 100 100
Diluted 100 100
DANA HOLDING CORPORATION
Consolidated Statement of Operations (Unaudited)
For the Six Months Ended June 30, 2009 and 2008
Dana Combined(1) Dana
Six Six Five Prior Dana
Months Months Months One Month
Ended Ended Ended Ended
(In millions, except June 30, June 30, June 30, January 31,
per share amounts) 2009 2008 2008 2008
Net sales $2,406 $4,645 $3,894 $751
Costs and expenses
Cost of sales 2,361 4,393 3,691 702
Selling, general and
administrative expenses 134 183 149 34
Amortization of intangibles 35 31 31
Realignment charges, net 79 57 45 12
Impairment of goodwill 75 75
Impairment of intangible assets 6 7 7
Other income, net 90 60 52 8
Income (loss) from continuing
operations before interest,
reorganization items and income
taxes (119) (41) (52) 11
Interest expense (contractual
interest of $17 for the one month
ended January 31, 2008) 72 70 62 8
Reorganization items (2) 119 21 98
Fresh start accounting adjustments 1,009 1,009
Income (loss) from continuing
operations before income taxes (189) 779 (135) 914
Income tax benefit (expense) 30 (231) (32) (199)
Equity in earnings of affiliates (4) 5 3 2
Income (loss) from continuing
operations (163) 553 (164) 717
Loss from discontinued operations (9) (3) (6)
Net income (loss) (163) 544 (167) 711
Less: Net income (loss)
attributable to noncontrolling
interests (6) 7 5 2
Net income (loss) attributable to
the parent company (157) 537 (172) 709
Preferred stock dividend
requirements 16 13 13
Net income (loss) available to
common stockholders $(173) $524 $(185) $709
Income (loss) per share from
continuing operations attributable
to parent company stockholders:
Basic $(1.72) $(1.81) $4.77
Diluted $(1.72) $(1.81) $4.75
Loss per share from discontinued
operations attributable to parent
company stockholders:
Basic $- $(0.02) $(0.04)
Diluted $- $(0.02) $(0.04)
Net income (loss) per share
attributable to parent company
stockholders:
Basic $(1.72) $(1.83) $4.73
Diluted $(1.72) $(1.83) $4.71
Average common shares outstanding
Basic 100 100 150
Diluted 100 100 150
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the six months
ended June 30, 2008.
DANA HOLDING CORPORATION
Consolidated Balance Sheet (Unaudited)
As of June 30, 2009 and December 31, 2008
(In millions, except per share amounts)
June 30, December 31,
Assets 2009 2008
Current assets
Cash and cash equivalents $553 $777
Accounts receivable
Trade, less allowance for
doubtful accounts
of $21 in 2009 and $23 in 2008 789 827
Other 198 170
Inventories
Raw materials 318 394
Work in process and finished goods 389 521
Other current assets 82 58
Total current assets 2,329 2,747
Goodwill 109 108
Intangibles 521 569
Investments and other assets 206 207
Investments in affiliates 133 135
Property, plant and equipment, net 1,762 1,841
Total assets $5,060 $5,607
Liabilities and equity
Current liabilities
Notes payable, including current portion
of long-term debt $30 $70
Financial obligation related to GM
supplier program 11
Accounts payable 573 824
Accrued payroll and employee benefits 121 120
Accrued realignment costs 39 65
Taxes on income 65 93
Other accrued liabilities 287 274
Total current liabilities 1,126 1,446
Long-term debt 1,069 1,181
Deferred employee benefits and other non-
current liabilities 855 845
Commitments and contingencies
Total liabilities 3,050 3,472
Parent company stockholders' equity
Preferred stock, 50,000,000
shares authorized
Series A, $0.01 par value, 2,500,000
issued and outstanding 242 242
Series B, $0.01 par value, 5,400,000
issued and outstanding 529 529
Common stock, $.01 par value,
450,000,000 authorized,
100,104,605 issued and outstanding 1 1
Additional paid-in capital 2,325 2,321
Accumulated deficit (879) (706)
Accumulated other
comprehensive loss (308) (359)
Total parent company
stockholders' equity 1,910 2,028
Noncontrolling interests 100 107
Total equity 2,010 2,135
Total liabilities and equity $5,060 $5,607
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended June 30, 2009 and 2008
Three Months Ended
(In millions) June 30, June 30,
2009 2008
Cash flows operating activities
Net loss $(3) $(119)
Depreciation 79 73
Amortization of intangibles 21 23
Amortization of inventory valuation 4
Amortization of deferred financing charges
and original issue discount 11 7
Impairment of goodwill and other intangible
assets 6 82
Deferred income taxes (13) (15)
Gain on extinguishment of debt (40)
Reorganization:
Payment of claims (1) (9)
Reorganization items net of cash payments (3) (5)
Pension - contributions in excess of expense (4) (16)
Change in working capital 77 35
Other, net (34) 16
Net cash flows provided by operating
activities (1) 97 76
Cash flows investing activities
Purchases of property, plant and
equipment (1) (24) (47)
Proceeds from sale of businesses and assets 2
Other (12)
Net cash flows used in investing activities (22) (59)
Cash flows financing activities
Net change in short-term debt (11) (81)
Deferred financing payments (1) (1)
Proceeds from long-term debt 3
Reduction of long-term debt (79) (3)
Preferred dividends paid (11)
Other (4) (7)
Net cash flows used in financing activities (92) (103)
Net decrease in cash and cash equivalents (17) (86)
Cash and cash equivalents beginning of
period 549 1,283
Effect of exchange rate changes on cash
balances 21 (6)
Cash and cash equivalents end of period $553 $1,191
(1) Free cash flow of $73 in 2009 and $38 in 2008 is the sum of net cash
provided by (used in) operating activities (excluding claims payments)
reduced by the purchases of property, plant and equipment.
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2009 and 2008
Dana Combined(1) Dana
Six Six Five Prior Dana
Months Months Months One Month
Ended Ended Ended Ended
(In millions) June 30, June 30, June 30, January 31,
2009 2008 2008 2008
Cash flows operating activities
Net income (loss) $(163) $544 $(167) $711
Depreciation 152 142 120 23
Amortization of intangibles 42 38 38
Amortization of inventory valuation 49 49
Amortization of deferred financing
charges and original issue discount 18 11 11
Impairment of goodwill and other
intangible assets 6 82 82
Deferred income taxes (26) 174 (17) 191
Gain on extinguishment of debt (40)
Reorganization:
Gain on settlement of liabilities
subject to compromise (27) (27)
Payment of claims (2) (97) (97)
Reorganization items net of
cash payments (4) 56 (23) 79
Fresh start adjustments (1,009) (1,009)
Payments to VEBAs (2) (788) (733) (55)
Pension - contributions in excess
of expense (5) (22) (22)
Loss (gain) on sale of businesses
and assets (1) 8 1 7
Change in working capital (35) (154) (93) (61)
Other, net (21) 20 19
Net cash flows used in operating
activities (2) (77) (973) (851) (122)
Cash flows investing activities
Purchases of property, plant and
equipment (2) (54) (92) (76) (16)
Proceeds from sale of businesses
and assets 2 5 5
Change in restricted cash 93 93
Other (9) (4) (5)
Net cash flows provided by (used
in) investing activities (52) (3) (80) 77
Cash flows financing activities
Net change in short-term debt (35) (106) (88) (18)
Advance received on corporate
facility sale 11
Proceeds from Exit Facility debt 1,430 80 1,350
Deferred financing payments (1) (40) (1) (40)
Proceeds from long-term debt 3
Reduction of long-term debt (82) (7) (7)
Preferred dividends paid (11) (11)
Repayment of debtor-in-possession
facility (900) (900)
Payment of DCC Medium Term Notes (136) (136)
Original issue discount payment (114) (114)
Issuance of Series A and Series B
preferred stock 771 771
Other (2) (14) (12) (1)
Net cash flows provided by (used in)
financing activities (106) 873 (39) 912
Net increase (decrease) in cash
and cash equivalents (235) (103) (970) 867
Cash and cash equivalents
beginning of period 777 1,271 2,147 1,271
Effect of exchange rate changes
on cash balances 11 19 14 5
Net change in cash of discontinued
operations 4 4
Cash and cash equivalents end
of period $553 $1,191 $1,191 $2,147
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the six months
ended June 30, 2008.
(2) Free cash flow of ($131) in 2009 and ($180) in 2008 is the sum of net
cash provided by (used in) operating activities (excluding claims
payments) reduced by the purchases of property, plant and equipment.
DANA HOLDING CORPORATION
Segment Sales & EBITDA
For the Three Months Ended June 30, 2009 and 2008
(In millions) Three Months Ended
June 30, June 30,
Sales 2009 2008
Light Vehicle Driveline $455 $844
Sealing 120 201
Thermal 42 77
Structures 129 255
Commercial Vehicle 250 441
Off-Highway 194 513
Other 2
Total Sales $1,190 $2,333
EBITDA
Light Vehicle Driveline $40 $49
Sealing 2 23
Thermal (1) 3
Structures 1 26
Commercial Vehicle 21 24
Off-Highway 5 47
Segment EBITDA 68 172
Shared services and
administrative (5) (7)
Other income (expense), net 33 1
Foreign exchange not in
segments (2) (2)
EBITDA $94 $164
DANA HOLDING CORPORATION
Segment Sales & EBITDA
For the Six Months Ended June 30, 2009 and 2008
Dana Combined(1) Dana
Six Six Five Prior Dana
Months Months Months One Month
(In millions) Ended Ended Ended Ended
June 30, June 30, June 30, January 31,
Sales 2009 2008 2008 2008
Light Vehicle Driveline $879 $1,705 $1,424 $281
Sealing 237 396 332 64
Thermal 81 157 129 28
Structures 246 525 435 90
Commercial Vehicle 507 846 716 130
Off-Highway 456 1,012 855 157
Other 4 3 1
Total Sales $2,406 $4,645 $3,894 $751
EBITDA
Light Vehicle Driveline $33 $86 $76 $10
Sealing 42 36 6
Thermal 9 6 3
Structures 9 44 40 4
Commercial Vehicle 27 46 40 6
Off-Highway 16 89 75 14
Segment EBITDA 85 316 273 43
Shared services and administrative (10) (13) (10) (3)
Other income (expense), net 32 (5) (3) (2)
Foreign exchange not in segments 3
EBITDA $110 $298 $260 $38
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the six
months ended June 30, 2008.
DANA HOLDING CORPORATION
Segment EBITDA Reconciliation (Unaudited)
Reconciliation of Segment EBITDA to Income (Loss)
from Continuing Operations Before Income Taxes
For the Three Months Ended June 30, 2009 and 2008
Three Months Ended
(In millions) June 30, June 30,
2009 2008
Segment EBITDA $68 $172
Shared services and administrative (5) (7)
Other income, net 33 1
Foreign exchange not in segments (2) (2)
EBITDA 94 164
Depreciation (79) (72)
Amortization (21) (27)
Realignment (29) (40)
DCC EBIT (3)
Impairment (6) (82)
Reorganization items, net 3 (12)
Gain on extinguishment of debt 40
Strategic transaction expenses (1) (3)
Loss on sale of assets, net (2)
Stock compensation expense (2) (3)
Foreign exchange on intercompany loans
and market value adjustments on
hedges 9 (6)
Interest expense (37) (35)
Interest income 6 14
Loss from continuing operations
before income taxes $(23) $(107)
DANA HOLDING CORPORATION
Segment EBITDA Reconciliation (Unaudited)
Reconciliation of Segment EBITDA to Income (Loss)
from Continuing Operations Before Income Taxes
For the Six Months Ended June 30, 2009 and 2008
Dana Combined (1) Dana
Six Six Five Prior Dana
Months Months Months One Month
Ended Ended Ended Ended
(In millions) June 30, June 30, June 30, January 31,
2009 2008 2008 2008
Segment EBITDA $85 $ 316 $273 $ 43
Shared services and administrative (10) (13) (10) (3)
Other income (expense), net 32 (5) (3) (2)
Foreign exchange not in segments 3
EBITDA 110 298 260 38
Depreciation (152) (142) (119) (23)
Amortization (42) (87) (87)
Realignment (79) (57) (45) (12)
DCC EBIT (3) (3)
Impairment (6) (82) (82)
Reorganization items, net 2 (119) (21) (98)
Gain on extinguishment of debt 40
Strategic transaction expenses (2) (3) (3)
Loss on sale of assets, net (1) (2) (2)
Stock compensation expense (4) (3) (3)
Foreign exchange on intercompany
loans and market value adjustments
on hedges 5 11 7 4
Interest expense (72) (70) (62) (8)
Interest income 12 29 25 4
Fresh start accounting adjustments 1,009 1,009
Income (loss) from continuing
operations before income taxes $(189) $779 $(135) $914
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the six
months ended June 30, 2008.
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